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Following is the full text of the speech (English only ) by Mr Richard Yuen, Secretary, Hong Kong Port and Maritime Board, at the Seminar on Hong Kong Maritime Services held in London on November 19 1998(London Time):
Introduction
Ladies and Gentlemen, being in London is always a somewhat humbling experience if you are from overseas and involved in shipping. London has been the pre-eminent centre for shipping in the world for centuries past and as we approach the next millennium, your position remains unchallenged.
Walking down St. Mary Axe to the Baltic this morning you can sense the shipping history and appreciate the key role played by this famous street in shaping the institutions that today are the foundations of modern shipping.
In Asia, Hong Kong has long been synonymous with shipping and we have charted our development with that of the port and shipping lines that served the merchants and manufacturers of southern China. This morning I will provide some background to the port and shipping development of Hong Kong and what is envisaged for the future.
The Hong Kong Port and Maritime Board
However, before I do that, let me digress and briefly outline the background leading to the establishment of the Hong Kong Port and Maritime Board.
The Port Development Board was established in Hong Kong in 1990 as a non-statutory body to advise the Government on the strategic development of the port of Hong Kong and the co-ordination of land and marine aspects of port development. The Board successfully brought together the Government and private sector to formulate and implement a port development strategy and promote the port.
The Government has been aware for some time that there was a need to promote the shipping industry as a whole. After all, Hong Kong shipowners control over 6 per cent of world tonnage amounting to over 31 million gross tons. There are some 1,000 shipping related companies operating in Hong Kong which provide ship management, brokerage, finance, insurance, arbitration, legal, naval architecture and ship surveying services.
To build on the experience and success of the Port Development Board and to promote synergy between the port and shipping industry, the Board was reorganised by expanding its role to include the promotion of Hong Kong's shipping industry and Hong Kong as a shipping centre. The retitled Hong Kong Port and Maritime Board was established in June this year. The Chairman of the Board, Mr. Peter Thompson, is well known as a maritime lawyer in Hong Kong and of the twenty Board members, sixteen are from various sectors of the port and shipping industry. A key objective of the Board is to provide a formal and high level channel where the Government can listen to the views of the port and shipping industry and respond to such views in supporting and providing a friendly business environment for the port and shipping business in Hong Kong, an aim that is shared by such long established and highly respected bodies like the Hong Kong Shipowners Association. As such, the new Board is a one stop shop for anybody seeking information on shipping opportunities in Hong Kong.
Port Development
The historical role of Hong Kong has been well documented and throughout its existence its entrepot role as the port for southern China has ensured its success. With the rapid development of an export oriented economy in the Pearl River Delta area, Hong Kong has seen container throughput more than quadruple from 3.5 million TEUs (Twenty-foot Equivalent Units) in 1987 to 14.6 million in 1997. This makes Hong Kong the busiest container port in the world for the sixth successive year and the first port to pass the one hundred million containers mark in March last year.
Apart from its size, what sets Hong Kong apart from most other ports is that it is fully privately owned and operated from the line boat that ties up the ship to the container terminals that performs the cargo transfers in super quick time. This system enables Hong Kong to take advantage of the commercial skills and flexibility of the private sector and keeps to a minimum bureaucratic intervention in the market. It also nurtures the competitive skills that have made our four terminal operators, Hong Kong International Terminals, Modern Terminals Limited, Sealand and COSCO, global players in the field of container port management.
We encourage this global approach by our ports industry and we forecast plenty of business for them at home in Hong Kong. Our port cargo forecasts undertaken by independent consultants predict a growth rate of 4.8 % per annum over the foreseeable future based upon the continued healthy growth in economic activity in our present key catchment area, the Pearl River Delta, and expansion of the catchment to inland provinces of south west China. This may not seem a high figure in percentage terms but it represents an extra million containers a year.
We are responding to meet this demand on all legs of the total supply value chain. For manufacturers on the west side of the Pearl River Delta, a dedicated River Trade Terminal at Tuen Mun opened in October to receive and consolidate cargoes brought in by low transport cost river barges before feeding them to the ocean carriers at Kwai Chung terminals or in the mid-stream. Almost two million containers were transported by this route in 1997 and growth this year is running at 13%.
Shipping lines and alliances have the choice of eight container terminals operated by four companies in the Kwai Chung Port. The smallest operator, Sealand processes over one million containers through its only one 305 metre berth, which is more than three times the world average of 250,000 TEUs handling capacity per berth. All this is brought by advanced technology, new systems and improved procedures through keen competition between the operators. Mid-stream operations, involving the transfer of cargoes from ships at buoys and anchorage's, are better integrated with container terminal operations since the development of two mid-stream depots at Kwai Chung this year. These mid-stream operations provide a low cost alternative to container terminals to meet less time sensitive customer needs in this segment of the transport chain and account for three million containers per year.
Beyond improved productivity we are investing in additional port facilities such as Container Terminal Nine. This will be our largest facility to date occupying 70 hectares or an extra 33% of port area, providing four deep sea and two feeder berths to cater for interchange between inter-asia and inter-continental shipping services and adding some 3 million container throughput capacity per annum. As part of this massive project we will be dredging the entire Kwai Chung Port to 15 metres depth to accommodate fully laden the largest ocean carriers presently envisaged. These works will commence shortly with new berths coming into operation from late 2001 to the mid 2004.
I have described Hong Kong port developments and perhaps I should mention the recent growth in the two Shenzhen ports of Shekou and Yantian. These ports handled over a million containers last year, nine times their throughput of five years ago and are grappling with the effects of such rapid growth, Yantian is planning additional berths and Shekou is examining the feasibility of a new entry channel to handle increased shipping movements. We anticipate continued expansion of these ports and see the competitive forces so created as healthy. Our advantage is the critical mass of global and regional shipping services operating from Hong Kong, the extensive choice of service providers and their long history of high standards and our strategic location for both the east and west sides of the Pearl River Delta. In the long term, there will be sufficient cargo to support the continued growth of Hong Kong and Shenzhen ports and we are liaising closely with the Shenzhen Ports Authority to improve co-operation in planning further facilities.
Hong Kong as a Shipping Centre
Our expanding port is an anchor as it were to our success as a shipping centre over the years. As I mentioned earlier Hong Kong has long been a centre for ship ownership with over 6% of the world's fleet owned or managed from Hong Kong. Marine services are abundant with a healthy representation of lawyers, insurance brokers, ship and cargo brokers, P and I Clubs and arbitration services. It's a small wonder that this is so, shipping services naturally cluster around a major port but we have other major advantages such as one of the most benign tax regimes in the world. We intend to generate an even more business friendly environment for shipping. We have reduced the cost of doing shipping business in Hong Kong this year and more improvements are under study in many different areas which I will explain later.
But first let me say something about the relationship between Hong Kong and Mainland China in the port and shipping side after the reunification last year. Articles 124-127 of the Basic Law clearly set out the autonomy of Hong Kong in terms of maintaining its previous system of shipping management and regulation, the autonomous Shipping Register and that private shipping businesses and container terminals may continue to operate freely.
In terms of shipping business, I think we have seen a number of very positive developments in the last year. Government has embarked on a strategy of promoting the service sector of our economy and has highlighted the promotion of Hong Kong as an International Shipping Centre as an element of this strategy.
During the last twelve months a number of initiatives have been taken to encourage ship owners to our Register including reduced fees and a simplified but still rigorous survey cycle that will again reduce costs whilst maintaining our reputation as a quality register. These two measures will save the shipowner over 20,000 U.S. dollars in the first year of registration under the Hong Kong flag. Hong Kong does not impose any nationality requirement on officers or crew manning their vessels. We have recently reduced the fees and simplified procedures for the employment and discharge of crew providing an additional saving of over 2,000 U.S. dollars per annum for a ship on the Hong Kong register.
We have fully computerised our procedures for the registration of ships and the process can be completed in only a few hours.
For all resident shipowners we have entered into a MOU with the mainland tax authorities on double tax arrangements and amended our tax laws to permit reciprocal exemption of freight tax. Action is being taken with a priority list of countries to put this exemption into effect thus reducing the overseas tax liability of resident shipowners.
I spoke earlier about the establishment of the Hong Kong Port and Maritime Board. The Board will give priority to building on the excellent supporting services available in Hong Kong, such as telecommunications, financial, insurance and legal services to attract more Mainland and overseas shipping companies to set up shop in Hong Kong as the international shipping centre of Asia. I feel a lot of enthusiasm coming from the Board and already the members have formed a number of expert working groups to deliver recommended improvements in these fields for the Board to follow up.
This morning you will hear the views of two people from the shipping business about Hong Kong today and where it is going. I hope you will find the seminars of interest and that in future you will keep in touch with the Hong Kong Port and Maritime Board and if you are considering setting up a base to explore business opportunities in the fast growing Asia and Mainland China market, do consider Hong Kong. You are always welcome. You can do it through the Hong Kong Government London Economic and Trade Office, or contact us direct through fax, telephone or e-mail. Rest assured you will be most welcome.
Thank you.
End/Thursday, November 19, 1998
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